Barnett Formula

Earl of Mar and Kellie Excerpts

Tuesday 17th December 2013 Grand Committee

[The Earl of Mar and Kellie (LD)]

My Lords, I will speak briefly in the gap.

I was a member of the Select Committee which recommended moving from the Barnett formula to needs assessment. However, the first thing we learnt from the evidence was that the Barnett formula is extremely simple to operate, which was a bonus for the Treasury, which knew immediately how much was to be allocated to Scotland, Wales and Northern Ireland.

We learnt from the evidence that England and Scotland are pretty similar in terms of needs, while Wales has a disproportionate number of ill people and Northern Ireland a disproportionate number of young people. We also learnt, as I sincerely believe, that Wales misses out under the current arithmetic of the Barnett formula. In Scotland the Barnett formula is seen as a bribe to stay.

A more valid reason, and in my view the only possible justification, for the £1,600 per person additional spend in Scotland is that the tax take from Scotland does not include the oil and gas revenues, because these are allocated to the slightly fictitious area called the United Kingdom continental shelf, not to Scotland.

Ultimately, any perceived proposed reduction in the Barnett formula is a gift to the yes campaign and the possibility of Scotland becoming a better democracy. It was a great disappointment that there was no White Paper from the no campaign, one with a title something like “The Better Governance of Scotland”.

I understand that the three major parties still have no idea what they would like to deliver for Scotland; they need to work that out. They all talk about more devolution, but I wonder how much more can be devolved before eating into what I call the four pillars of reservation: microeconomics and taxation, the welfare system, foreign policy, and defence. The solution for a better United Kingdom is never going to be described in the party election manifestos, so there is more work to be done on this.

Noble Lords should not read anything into the fact that I am speaking from this side of the Committee—I have always done so since the Grand Committee came into effect. We were allowed to sit anywhere, and I like to see the whites of the Minister’s eyes.

Scotland Bill

Earl of Mar and Kellie Excerpts

Thursday 15th March 2012 Lords Chamber

[Lord Lyell]

My Lords, I was delighted to see my noble friend Lord Attlee here, because I was about to follow some of his grandfather’s advice: that a period of silence from me had been welcome until now. Today, however, I shall break my duck regarding income, in strong support of my noble friend Lord Forsyth. This is a preliminary strike about dividend income and pensions income.

I am sure that my noble and learned friend will be able to give advice at an early stage, but on page 25 of the Bill we come to Clause 31, headed, “Income tax for Scottish taxpayers”. At lines 34 and 35 in Clause 31(3), new subsection (3C) refers to Section 16, which I presume to be that of the Income Tax Act 2007. It says that it,

“has effect for determining which part of a Scottish taxpayer’s income consists of savings income”.

As a non-practising member of the Institute of Chartered Accountants of Scotland, but very much as a consumer who takes advice, I seem to recall that until 10 years ago one’s income tax was classified as earned and unearned income. Indeed, my colleagues with whom I worked then have confirmed that. However, we now have this completely different concept of savings income, earned income and other income being applied to Scottish taxpayers. It would be different from any other United Kingdom definition of what savings income or other income will be. Perhaps my noble and learned friend will be able to take note of that and cover it at some stage. However, I support most strongly what my noble friend Lord Forsyth has said at this stage. I am happy to let your Lordships know that this will be the first of one or two efforts from the mouse that roared, as I call myself—that is, the accountant in the backwoods of Angus.

[The Earl of Mar and Kellie]

My Lords, my noble friend Lord Forsyth is suggesting that we need another referendum on the use of tax powers. It is my memory that, 12 years ago, the second question in the referendum was along the lines of, “This Parliament should/should not have tax-varying powers”. Do tax-varying powers not strike a lot wider than the Scottish variable rate, which was enacted? Consent has already been given for any form of variation in existing taxes.

[Lord Sewel]

My Lords, I refer to the earlier discussion about groupings. Do I take it that the authoritative groupings list that we are working to is the one that is still being distributed by the Printed Paper Office?